ACA rates on the rise as future of enhanced subsidies in question

Affordable Care Act marketplace coverage will cost consumers an average of 7% more for 2025 than it did in 2024, according to KFF.

KFF research found insurers requested a median premium increase of 7% for 2025, similar to the 6% premium increase filed for 2024. Insurers cite growing health care prices – particularly for hospital care – as a key driver of premium growth in 2025, as well as growing use of weight loss and other specialty drugs.

Open enrollment for the ACA marketplaces for 2025 began Nov. 1 and continues through Jan. 15, 2025, in most states.

With median premiums on the rise, ValuePenguin reported that for 2025, a silver health plan costs $621 per month on average for a 40-year-old. Rates depend on things like age, the plan tier chosen and the state in which you live.

Most people who buy coverage from HealthCare.gov or a state marketplace don't pay the full monthly cost for health insurance. More than 90% of health insurance plans from HealthCare.gov or state marketplaces receive rate subsidies. These subsidies lower the monthly cost of health insurance. About 4 in 5 people can get health insurance for $10 or less per month.

Vermont saw the highest percentage of median rate increases for 2025 – with a silver plan for a 40-year-old going up by 27% over the current year. Six states – Alabama, Indiana, Iowa, Louisiana, South Carolina and South Dakota – saw average rates drop from 2024.

ValuePenguin reported UnitedHealthcare has the highest average monthly rate for a 40-year-old with a silver plan:  $631. Kaiser Permanente had the cheapest average monthly rate for that same silver plan for a 40-year-old: $507.

Aetna’s average monthly rate for a 40-year-old with a silver plan took the biggest jump over the previous year – 17%. Ambetter’s average monthly rate dropped by 1% for the same silver plan for a 40-year-old.

Those who want a higher level of coverage will pay more for it in 2025, ValuePenguin reports, with the average rate for a platinum plan going up by 13%. Those who want more flexibility in the doctors they see also will pay more for that privilege – with a 40-year-old nonsmoker paying an average monthly premium for a silver plan PPO of $662 as opposed to $560 for an HMO. Monthly premiums for HMO silver plans went up by 9% compared with an 8% increase for an average silver plan PPO.

What will happen to enhanced subsidies?

Meanwhile, enhanced subsidies that lower premium payments for ACA coverage are due to expire in 2025 unless Congress acts to extend them.

First enacted in 2021 under the American Rescue Plan Act, the enhanced subsidies were renewed through the end of 2025 by the Inflation Reduction Act. Since their implementation, ACA marketplace enrollment has grown each year and hit record highs, reaching more than 21 million in 2024. Southern states have seen the most growth in ACA Marketplace signups, KFF reports.

KFF said if these enhanced subsidies are not renewed by Congress and expire at the end of 2025, ACA enrollee premium payments are expected to increase by over 75% on average, with people in some states seeing their payments more than double. Without further extension, the Congressional Budget Office estimates ACA enrollment will drop from 22.8 million in 2025 to 18.9 million in 2026 and fall to 15.4 million in 2030. While some may be able to find other sources of coverage, others will become uninsured.

By the time these enhanced subsidies are currently set to expire at the end of next year, they will have been an integral part of the ACA marketplaces for five years, or nearly half as long as the ACA marketplaces have existed. Millions of enrollees have come to rely on the enhanced subsidies, with more people gaining marketplace coverage since President Joe Biden took office than had signed up for ACA marketplace when the markets first launched in 2014. If the enhanced subsidies expire, almost all ACA marketplace enrollees will experience steep increases in premium payments in 2026. However, the subsidies come at a steep cost to taxpayers, with the CBO projecting that a permanent extension of the subsidies would cost $335 billion over the next 10 years.

KFF’s analysis finds that:

• The recent growth in ACA marketplace plan enrollment has been driven primarily by low-income people, with signups by people with incomes up to 2.5 times the federal poverty level growing 115% since 2020.
• Enhanced subsidies have cut premium payments by an estimated 44% ($705 annually) for enrollees receiving premium tax credits. If the subsidies expire, most marketplace enrollees will see premium payment increase substantially.
• Without these enhanced subsidies, premiums would double or more, on average, for subsidized enrollees in 12 states using Healthcare.gov.

While enhanced subsidies expire at the end of 2025, insurers and regulators will want to know well in advance whether the subsidies will be renewed or discontinued so they can set accurate premiums for 2026.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].